Russia may legalize bitcoin – Bank of Russia deputy chairman

The Bank of Russia has signaled it is ready to legalize the world’s first mainstream cryptocurrency, despite the big risks and setbacks the digital money has experienced. The Bank’s recognition means it can better regulate it, and even collect tax.

“We advocate a careful approach to bitcoin and are monitoring
the situation along with the Bank for International
Settlements,” Gazeta.ru quotes Georgy Luntovsky, the Bank of
Russia’s Deputy Chairman speaking on Wednesday at the annual
International Banking Congress in St. Petersburg.

“One can’t ignore this instrument, maybe this is the
future,” Luntovsky added.

Mr. Luntovsky also said the Central Bank of Russia is studying
bitcoins together with the government.

“Maybe at some time we’ll take a decision about the
legislative regulation of this question,” he said.

The bank deputy chairman’s comments contrast with Russia’s
previous stance towards the risky currency, which is often
obtained illegally and used for money laundering. In February,
Russia’s Prosecutor General’s Office issued a ban against any sort of monetary substitute for the
country’s official currency, the ruble.

Bitcoins in theory offer people a simpler and cheaper way to pay
for goods electronically, however, its emergence as the first
mainstream virtual currency has meant it has met many obstacles
including theft, and use in sex and drug trafficking, and other
illicit practices. Despite these growing pains the world’s most
popular cryptocurrency is still operational.

One of the main features of bitcoin is that it offers the user
anonymity, which has led many to use the currency to carry out
illegal deeds.

In January the Central Bank issued a statement that strongly
discouraged the use of bitcoin, saying that the anonymity of the
currency puts Russians at risk of either knowingly or not
becoming involved in illegal activity such as laundering or even
financing terrorism.

Because bitcoin is not regulated by any government, its value is
unstable and in just one day has gained and lost up to 50
percent. The Central Bank of Russia has also warned that bitcoin
“carries a high risk in devaluation."

Many Russian bankers do not want to quickly discredit bitcoin, as
they see it as a gateway to developing other online payment
systems. German Gref, the CEO of the country’s largest bank
Sberbank, is a staunch advocate of the cryptocurrency. Banks in
America have already patented bitcoin to use as a model for their
own online payment systems.

Many countries have already taken formal measures to ban bitcoin,
for example China and Denmark.
Like Russia, Japan has ruled that bitcoin is not a currency, but has
expressed interest in taxing it.